Prakash Constrowell Limited, a construction company headquartered in Nashik, Maharashtra, has entered the capital markets with an Initial Public Offer (IPO) to raise Rs.60 Crores. The issue would remain open for subscription between September 19, 2011 and September 21, 2011.
The 100% Book Building Issue would be in a price band of Rs.130/- to Rs.138/- per equity share for shares having a Face Value of Rs.10/- each. The applications can be made in a bid lot of 50 Equity Shares and in multiples thereof. Intensive Fiscal Services Private Limited, based in Mumbai is the Book Running Lead Manager to the Issue while Bigshare Services Pvt. Ltd. is the Registrar to the issue.
Company Background:
Prakash Constrowell Limited is a construction company predominantly engaged in the business of infrastructure development and civil construction. The company provides integrated engineering, procurement and construction services. It undertakes projects for various Government / semi-government bodies and other private sector clients. Company is headquartered at Nasik, Maharashtra and has operations across the state of Maharashtra. The promoters of the company are Mr. Prakash P. Laddha and Mrs. Aruna P. Laddha
The company focuses on the following segments of construction :
The 100% Book Building Issue would be in a price band of Rs.130/- to Rs.138/- per equity share for shares having a Face Value of Rs.10/- each. The applications can be made in a bid lot of 50 Equity Shares and in multiples thereof. Intensive Fiscal Services Private Limited, based in Mumbai is the Book Running Lead Manager to the Issue while Bigshare Services Pvt. Ltd. is the Registrar to the issue.
Company Background:
Prakash Constrowell Limited is a construction company predominantly engaged in the business of infrastructure development and civil construction. The company provides integrated engineering, procurement and construction services. It undertakes projects for various Government / semi-government bodies and other private sector clients. Company is headquartered at Nasik, Maharashtra and has operations across the state of Maharashtra. The promoters of the company are Mr. Prakash P. Laddha and Mrs. Aruna P. Laddha
The company focuses on the following segments of construction :
- Infrastructure development; including construction and maintenance of roads / highways, bridges, including projects on public private partnership (PPP) model, industrial parks, work-shops, hospitals, educational institutions;
- Civil construction; including, Government staff quarters, hostel buildings and auditoriums;
- Residential and commercial real estate construction
IPO Grading:
The IPO was assigned the grading by Credit Rating Agency CARE and was assigned an IPO Grade 2/5 indicating "Below Average Fundamentals". CARE assigns IPO grading on a scale of IPO Grade 5 to IPO Grade 1, with IPO Grade 5 indicating strong fundamentals and IPO Grade 1 indicating poor fundamentals.
According to the grading report, the grading reflects the promoters' significant experience in the construction business and demonstrated track record in the execution of small to medium sized projects. The Grading is however, constrained by Prakash Constrowell Limited's relatively moderate scale of operations, fluctuating operating profit margin, highly competitive nature of the industry, geographical concentration of projects in the state of Maharashtra and the client concentration risk. (Click here to download complete grading report from CARE)
Analysis of Financials
According to the Red Herring Prospectus (RHP) filed with SEBI, the following are the financials of the company:
According to the grading report, the grading reflects the promoters' significant experience in the construction business and demonstrated track record in the execution of small to medium sized projects. The Grading is however, constrained by Prakash Constrowell Limited's relatively moderate scale of operations, fluctuating operating profit margin, highly competitive nature of the industry, geographical concentration of projects in the state of Maharashtra and the client concentration risk. (Click here to download complete grading report from CARE)
Analysis of Financials
According to the Red Herring Prospectus (RHP) filed with SEBI, the following are the financials of the company:
The company has posted a Net Profit After Tax (PAT) of around Rs.10.6 Crs for F.Y. 2010-11 as against around Rs.8.05 Crs for the preceding financial year. The company is asking for a price of around Rs.130/- to Rs.138/- a share, which implies a PE multiple of more than 10 times even on the lower end of the price band. Considering the relatively smaller size of its operations, the pricing of the IPO looks clearly stretched. Investors would have to decide whether they want to go for an expensive new company as against its relatively cheaper listed peers
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